Quality of service to decide operators' fate

James Middleton

November 28, 2008

2 Min Read
Quality of service to decide operators' fate

2009 will really show up the impact of the credit crunch on the global telecoms market, and it looks like more belt tightening lies ahead for the industry.

On Thursday, telecoms.com took a trip to London’s big screen IMAX cinema for a special showing of a dark and brooding thriller, featuring Informa Telecoms & Media’s own analyst contingent.

The event was a sneak preview of the analyst’s Mobile, Broadband and TV Outlook 2009 report, which will be available in the near future.

Nothing puts the impact of the credit crunch in perspective like seeing it leap out of a screen in 50 foot high, vertigo-inducing PowerPoint slides, with a focus on economic turmoil, an interventionist regulatory environment and the brutal competition faced by the mobile industry.

Wireless operators have long relied on the laziness of consumers to keep their subscriber numbers up. ‘Loyal customers’ is a funny term for customers who simply can’t be bothered to take their business elsewhere for the sake of a few quid. But in these straightened times, the wheels of inertia are to be greased by increased price sensitivity resulting in an increase in churn, the Informa analysts say.

“It’s time for operators to get their house in order,” said principal analyst Thomas Wehmeier, “Now is not the time for a second rate service experience.”

And with operators now judged on their ability to generate free cash flow, there are signs that carriers might cut capex if their margins are threatened by revenue weakness or an inflationary cost base, which is bad news for the network vendors.

On the other hand, Informa’s chief research officer, Mark Newman, notes that the carriers are being forced to optimise their data networks to keep up with the burgeoning demand for mobile internet services following the unforeseen success of the dongle.

After years of 3G hype and the clearing of the fog of disillusionment, mobile broadband that has become an unexpected runaway success. At the end of June there were 14 million HSPA subscribers in Europe, accounting for about 2.5 per cent of the total customer base, and growing by 3 million every quarter. There is also a noticeable trend of consumers using mobile broadband services to replace their fixed line internet, often with disappointing results.

This rapid growth means that the networks are taking a real hammering, and coupled with the quality of service issues arising from 3G’s poor in building coverage, the analysts are warning carriers to start investing in backhaul and in capacity rather than coverage in order to keep the subscribers sweet.

About the Author(s)

James Middleton

James Middleton is managing editor of telecoms.com | Follow him @telecomsjames

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